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Author Lewis sees messy end for Greece, Merkel exit

* Author forecasts Greece to default, leave euro
/ Source: Reuters

* Author forecasts Greece to default, leave euro

* Lewis says Merkel, Papandreou will not survive

* "Liar's Poker" movie, HBO drama next for Lewis

By Mark Egan

Greece will default on its debts, Ireland could too and Greek Prime Minister George Papandreou and German Chancellor Angela Merkel will be forced out as Europe's financial crisis plays out, author Michael Lewis predicted on Tuesday.

The writer who began his career exposing the culture of excess at Salomon Brothers in "Liar's Poker" is promoting his latest book "Boomerang: Travels in the New Third World," published this week by W.W. Norton.

The book details three years of research and reporting on Iceland, Ireland, Greece, Germany and California, revealing aspects of the global economy's woes and the national characteristics behind them. It follows his bestseller "The Big Short" about the U.S. subprime mortgage meltdown.

"Greece is defaulting, right? They are restructuring. Whatever you want to call it, Greece is defaulting," Lewis told Reuters in an interview. "The only question is how."

"I don't think Merkel is going to survive in Germany and I don't think Papandreou is going to survive in Greece -- they have so alienated their populations," he said.

Lewis believes efforts by European leaders to bail out Greece again and stave off contagion in Ireland, Portugal, Italy and even Spain only put off the inevitable.

While Lewis cautions that no one knows exactly how matters will play out, his predictions are closely watched given his position as one of America's best selling and most respected business journalists.

Keen to temper his forecasts, he added, "Nobody can tell you what is going to happen because it is too complicated."

With global markets in turmoil in recent days on fears Greece may default on its debts even amid a second expected bailout, Lewis expects "it will be very messy" and "Greece will leave the euro" with "creditors taking huge losses."

Following on, "I can't believe the Irish are not going to join that party" and default on its debts, letting its banks fail. "These sort of things could happen and it might even be healthy for them to happen rather than have this huge overhang," he said.

On the difference between Ireland and Greece, Lewis said: "The Irish just have a greater talent for suffering. If you imposed on the Greeks what the Irish have imposed on the Irish population, people would be getting shot."

SCHWARZENEGGER'S WHIM

Each chapter in "Boomerang," neatly meshing business and economic reporting with travel writing, appeared in slightly shorter form in Vanity Fair. The final chapter, on California, appears in the magazine's latest issue.

That chapter finds Lewis on an early-morning bike ride with former California Governor Arnold Schwarzenegger seeking to explain why the state's finances are in such distress.

Lewis admits staging the scene after interviewing the Austrian-American for a day in his office. "It was so static. He seemed to be a man in motion, so I put him in motion."

"At first I thought, 'I will go and lift weights with him. But I thought that will be so embarrassing,"' said Lewis, who next to the former body builder would look stick thin.

Lewis paints the former action movie star famed for "The Terminator" movies as a fantasy politician thrust into the impossible situation of having to grapple with California's almost intractable problems. He describes him as a person who sees what is ahead, paying little heed to what is behind him.

In perhaps the most revealing moment, Schwarzenegger tells Lewis he made his mind up to run for governor while heading to an appearance on Jay Leno's "The Tonight Show."

"He thought, 'This will freak them out if I go on TV and say I am going to do it,"' Lewis recalled Schwarzenegger telling him. "It was a whim."

Lewis has also enjoyed critical and commercial success at the movies -- his book "The Blind Side" about football was made into an Oscar-winning movie with Sandra Bullock and his book "Moneyball" about baseball is a hit movie starring Brad Pitt.

Next up for the prolific Lewis is writing a script for "Liar's Poker," which he said will be directed by Glenn Ficara and John Requa, who directed "Crazy, Stupid, Love."

He has also written a pilot for HBO called "Strays," a fictionalized account of a baseball agent who smuggled players from Cuba to America. "That is life-changing, if they make it," he said of the prospect of having his own television drama. (Editing by Christine Kearney and Cynthia Osterman)